Excuses, Excuses: New LIU Post Study Shows that Managers Use Them . . . to Pay Women Less

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Brookville, N.Y. — In difficult economic times, should anyone lucky enough to get a raise question its size? According to a new study published in the July/August issue of the journal Organization Science, women should.

“When managers knew that they could explain their pay decisions, citing limited resources, this consideration caused them to choose smaller raises for women than men,” said the study’s author, Maura Belliveau, Ph.D., associate professor in the College of Management at LIU Post. “And the difference was large.”

Managers who had average years of work experience gave male employees 71% of raise funds whereas they allocated only 29% of the available raise pool to female employees. This difference was even greater among more experienced managers.

These results come from a scenario experiment conducted with 184 male and female managers, all of whom had real-world experience allocating pay. Participants enacted the role of a manager who had to determine an employee’s raise. Participants were told that, due to financial difficulties that were not yet public, raise funds were limited. Other than the employee’s sex, the description of the employee (e.g., job, level of performance) and amount of money available to be distributed in raises were the same across experimental conditions.

Participants were randomly assigned to reward either a male or female employee in the explanation or no explanation condition. Before choosing a raise for the employee, managers in the explanation condition were told that they could subsequently explain their raise decision, sharing information about the firm’s financial difficulties. In the no explanation condition, managers were aware of the same problems but told that they could not explain their decision.

When managers could not explain their decision, they gave equal raises to men and women. However, when managers assessed women and could explain their raise, they not only paid women less than men, they also paid them less than women in the no explanation condition. Men’s raises were the same across explanation conditions. The study’s results held for male and female managers.

Dr. Belliveau noted, “Whenever research reveals disparities between men’s and women’s pay, there is a common retort: The gap ‘must’ be due to unobserved differences in men’s and women’s willingness or skill in negotiating for pay. Although some gender differences in negotiation exist, this study reveals a major disadvantage women incur that precedes any negotiation. By giving 71% of available raise resources to men, managers ensured that men did not need to negotiate to obtain a good raise. In contrast, managers’ raise decisions put women who performed at the same level as men in a position where they would not only need to negotiate to obtain a reasonable raise, but would also have to do so from the starting point of a ‘lowball’ amount. That’s an extremely challenging task, even for a skilled negotiator.”

The research study also explored why managers chose smaller raises for women, but not men, when they knew that they could explain their decisions. “Offering an explanation to employees is thought to be considerate and has been associated with employees feeling more fairly treated, even in the face of a bad outcome,” Dr. Belliveau said. “Because women are stereotypically depicted as more focused on process, managers assumed that women, but not men, would derive special value from the consideration and fair treatment evoked by an explanation.”

That belief led managers to substitute the explanation for higher pay for women, Dr. Belliveau concluded, creating a pattern of salary inequity that was likely unintentional and not obvious to managers.

“Having the opportunity to explain enables managers to think of themselves as treating women fairly from a process perspective. So, paradoxically, managers who give women less pay can think that they are treating women well. It is that combination that may make managers less likely to scrutinize their pay decisions for signs of bias.”

Interestingly, while managers may believe that women derive special value from fair treatment, research does not support that view. “Study after study shows that—despite stereotypes of women as more process-focused—women and men value procedurally fair treatment equally,” Dr. Belliveau explained. “This study’s results demonstrate, however, that managers’ ideas about how women value fair process loom larger than the objective reality.”

Data did not show that managers thought women would be more likely to believe the excuse, be more reasonable about pay constraints, or be less concerned about the size of their raises. Instead, Dr. Belliveau said, “When evaluating women, managers’ beliefs about the value of fair process shifted their attention away from the importance of the raise itself.”

What can women do to avoid underpayment? According to Dr. Belliveau, when research shows effects of managers’ stereotypes on women’s careers, individual women are constrained in what they can do to fix the problem. “Because asking colleagues about their salaries is often discouraged, women find it hard to obtain enough data on raises in their organization to identify a pattern of subtle bias, if it exists,” she said. “In addition, prior research on stereotyping suggests that targets of a stereotype are hard-pressed to change that perception.”

As for how managers and organizations might avoid creating gender inequity in pay, Dr. Belliveau said, “Managers need to consider their own assumptions. Given that male and female managers believe that women derive greater value from an excuse, then they are likely to use it as a substitute for pay and other rewards without thinking about the implications. Especially when an explanation for low pay is readily available—which it often is in this economy—managers and HR professionals need to closely monitor pay data in their organizations to ensure that the burden of low raises is not disproportionately placed on women.”

Organization Science is ranked among the top journals in management by Social Science Citation Index and is widely recognized in the fields of strategy, management, and organization theory. It is published by INFORMS.